An Insider’s View
“Quite frankly, I think some have underestimated Clayton,” said Ken Joseph, Managing Director, Disputes and Investigations practice, at Duff & Phelps. “There is a de-emphasis on some areas and re-prioritization of other areas—but he is still focused on wrongdoing.” Joseph was referring to Jay Clayton, the recently appointed chair of the U.S. Securities and Exchange Commission (SEC). Ken Joseph was the second speaker in a four-part webinar panel titled “SEC 2018 Enforcement Trends” sponsored by the Global Association of Risk Professionals (GARP) on July 25, 2018. He is also former Head of the Securities and Exchange Commission’s New York Regional Office Investment […]
A New Landscape
Jay Clayton, the recently appointed chair of the U.S. Securities and Exchange Commission (SEC) under President Trump, has signaled new directions in the enforcement of securities laws. What are the implications for financial risk managers? “There is shift away from ‘broken windows’—trying the smallest cases—and there is no longer a requirement for companies to admit wrongdoing,” said Amy Poster, Managing Principal at Alpha Pacific Strategies. She was the moderator and opening speaker in a four-part webinar panel titled “SEC 2018 Enforcement Trends” sponsored by the Global Association of Risk Professionals (GARP) on July 25, 2018. The SEC appears to be changing its […]
Consolidated Audit Trail
The eighth anniversary of the 2010 flash crash on May 6, 2010, is approaching, Beau Alexander reminded the audience at the webinar organized by the Global Association of Risk Professionals (GARP). Alexander is a Senior Sales Executive at FIS Global Trading, a publicly traded provider of financial services technology. The 2010 flash crash “was the second-largest intra-day swing in the stock market,” he said. That day the market lost two trillion dollars and then rebounded. “When you see volumes drop by 15 percent, there’s an activity that needs to be flushed out.” “Someone sitting in their parents’ basement had caused […]
Extracting Value from CECL 2
To meet the new for current expected credit losses (CECL) requirements, “you will need a lot of data,” said Thomas Caragher, Senior Product Manager of Financial & Risk Management Solutions at Fiserv, a US provider of financial services technology. Seven to ten years of data is not unreasonable. The payoff to massive data-gathering is that “you will be able to build strategy more effectively if you have information.” But what to do with the reams of data? First, you have to make some sense of it. “Start by correlating the data,” he said. Oil production might be correlated with loan demand […]
Extracting Value from CECL 1
“Turn the pain of compliance into the benefit of strategy,” said Thomas Caragher, Senior Product Manager of Financial & Risk Management Solutions at Fiserv, a US provider of financial services technology. He was speaking about the approaching deadline to implement new guidelines for current expected credit losses (CECL) at a webinar sponsored by the Global Association of Risk Professionals on April 11, 2018. CECL is the new impairment standard for credit impairment under the Financial Accounting Standards Board (FASB). Since it affects accounting, the effect of CECL will be felt “in department stores, cell phone companies, municipalities”—throughout the U.S. The purpose of business intelligence is […]
Behavioral Analytics 2
Industry leaders in the field of behavioral analysis (Facebook, Apple, Microsoft, Google, and Amazon – FAMGA, as some call them) are “decision architects,” said Joe Mattey, Vice President of Enterprise Risk Analytics, and Chief Risk Officer at USAA. Typically a FAMGA product designer will put together a solution, such as a screen dialog, and fine-tune it over the course of many randomized, controlled trials, to see if the proposed solution gets the desired result—or whether some components need to be changed. In this way, behavioral analysis is looking not just at a decision outcome, it is looking at how that […]
Myths of CECL
The time for proper accounting of credit impairment is running out. How prepared is your team? Do you even know what the biggest concern of the auditors will be? This was the call to action voiced by Tom Caragher, Senior Product Manager of Risk and Performance at Fiserv, a US provider of financial services technology on October 26, 2017. He spoke about implementation of current expected credit losses (CECL) at a webinar sponsored by the Global Association of Risk Professionals. (Note that CECL is the impairment standard under Financial Accounting Standards Board (FASB).) “When it comes to CECL, there are many […]
Clash of Titans
In the wake of the financial crisis, the two Titans that create accounting standards tried to hammer out agreement over how to account for impairment of loans. These bodies are the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB). “FASB and IASB share the same goal but unfortunately were not able to agree on the same standard,” said Emil Lopez, Director of Risk Measurement at Moody’s Analytics. FASB calls their impairment standard “current expected credit losses” (CECL) whereas IASB deals with impairment and expected losses in their International Financial Reporting Standards as IFRS 9. Lopez was […]
Move Beyond Spreadsheets
Is your firm ready? Financial institutions are seeking answers that will help them plan a roadmap for implementation of the new current expected credit losses (CECL) standard issued by the Financial Accounting Standards Board (FASB). “The runway looks long but firms need to start to prepare now,” said Anna Krayn, Team Lead for Impairment, Capital Planning and Stress Testing at Moody’s Analytics. She was the second of three panellists at the webinar “The Long Road to CECL” sponsored by the Global Association of Risk Professionals on September 8, 2016. “Now is the time to educate, organize and govern, quantify, and […]
Long Road, Many Challenges
Nothing like a financial crisis to show the rough spots in estimation of losses. “Credit losses weren’t being recognized on a timely basis,” and the impairment accounting models were complex and varied widely, according to Kevin Guckian, Partner, National Professional Practice at Ernst &Young. He was the first of three panellists at the webinar “The Long Road to CECL” sponsored by the Global Association of Risk Professionals on September 8, 2016. “FASB’s final standard should accelerate recognition of credit losses,” Guckian noted, referring to the current expected credit losses (CECL) standard newly adopted by the Financial Accounting Standards Board. He […]